I didn't mention, we have a portion of her funds in a total bond index fund. Would the monthly proceeds from the bond fund be considered interest or qualified dividends?

I don't find them on the list of so-called dividends, e.g., credit union dividends, which are actually interest. That list is in Pub 550. Also, the pub indicates that they would be reported on a 1099-INT. So I think you're safe.

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